The Hidden Plant
By: Robert D Judson, PE

Two production facilities exist at every operating location. One facility is productive and produces wealth. The other plant “The Hidden Plant” (THP) generates losses in revenue due to waste in materials, labor and energy. The ability to define the nature of “The Hidden Plant” and reduce its impact ultimately determines the profitability, success and long term survival of the plant.

The THP shows up in many forms. Excessive line changeovers, no minimal run times for production, inadequately trained maintenance personnel or lack of adequate spare parts to minimize plant downtime. Excessive inventory results in stales or discounted products. Insufficient inventory results in shorts to customers or overtime to meet deliveries. Short order lead times can result in excessive line changeovers and loss of line utilization. Losses show up as low yields, product left in lines after production runs, protein and lean variances, giveaway due to poor weight control, damaged and returned products, product out of spec, rejected products due to contamination or excess age, and excessive electrical and gas energy usage. Losses from using full scale production lines for R&D development can also affect profits significantly. Losses from capacity limiting machinery which limits production output of the overall production system is very costly.

The key to controlling and minimizing the impacts of the hidden plant are to map out the unit processes, measure and monitor the inputs and outputs of the system, and define where system losses are occurring. You can’t control what you can’t measure. The paradigm of preventing loss versus detecting it has resulted in significant improvements in processes. For comparative purposes, the cost of $1.00 raw materials compares to a finished product of $6.00, to a cost of $100.00 in the hands of the customer. The greatest loss is not the loss of the raw materials or the finished product in the plant. The final and crucial blow is the loss of a customer due to an out of control system which produces products that do not meet the customer requirements. The $1.00 raw material resulted in $100.00 worth of faulty material in the hands of the customer which caused the loss of the customer for unknown long-term future benefits.

Improvement processes apply to engineering, manufacturing or any process which can be defined and measured. The first step in the process is to identify the system and gain knowledge about where and how the system currently operates and how it operates. The next step is to assess the system’s current performance and determine if the process is consistent and meets your requirements. Make sure you understand what your customer wants, needs and is willing to pay for. Determination of variability requires knowledge of dynamic variation. By minimizing variation in the production process, a consistent and repeatable process can be developed and monitored using control chart theory.

For every process, upper and lower control limits can be mathematically defined and system controls can be defined. It’s important to recognize that your system can be in control and waste can still exist. A system in control that develops waste is going to consistently waste resources. A system in control that produces waste on a consistent basis will continue to produce a loss in revenue. Once your system is in control, you have the means to measure the system, define operating targets for the system, analyze the loss causes, develop improvement theories, test the theories, study the results, and ultimately reduce waste and by analyzing the statistical evidence of suggested improvements.